#Techradio

Friday, June 15

Small Business: Lots of Work, Low Pay for Entrepreneurs - but Getting Better

A new Citibank® survey reveals perpetual reinvention rewarded by grateful employees and customers. The surveyed small businesses and found that 23 percent of owners have gone without pay for at least a year as they work to keep their businesses afloat in a tough economy.
Small business owners like myself are struggling to stay afloat, but most that I speak to keep fighting the fight. Small business can turn on a dime if they stay on top of expenses, margins and bottom line. I predict that those of us who continue to morph and change to build our businesses, will do very well. An entrepreneurial spirit combined with good business sense will surely succeed.
I pulled the percentages below, because many I know (including myself) have experienced these issues...

78% have taken less profit

70% worked more hours than usual

69% Used their own money to help the business survive

54% say they have gone without a paycheck in order to keep the business running.

23% of owners have gone without pay for one year or more.

38% said their employees worked overtime without pay

18% of owners said employees either missed paychecks or had paychecks delayed.

"Small-business owners risk everything to pursue their dreams and are willing to do what it takes to make it," said Maria Veltre, Managing Director, Citi Small Business. "Their personal sacrifices, passion and ability to adapt have positioned them to capitalize on improving business conditions."

Following are the full results from Citibank:

Forty-three percent of small-business owners consider business conditions to be positive, according to the latest Citibank small business survey released today. This is a significant increase since August 2010, when 24 percent of small-business owners surveyed reported overall positive business conditions.
One-third (33 percent) of respondents said their own business is better than it was a year ago – up from 26 percent in January. Another 33 percent expect their business will grow by more than 10 percent this year.

"Small-business owners risk everything to pursue their dreams and are willing to do what it takes to make it," said Maria Veltre, Managing Director, Citi Small Business. "Their personal sacrifices, passion and ability to adapt have positioned them to capitalize on improving business conditions."

Necessity: The Mother of Reinvention
A majority of respondents (53 percent) say they have reinvented their business "to stay afloat or competitive." This strategy is reinforced in the current competitive climate that 38 percent of respondents describe as "extremely intense."

"Small-business owners are especially adept at reinvention – whether because of obstacles or new visions for growth," Veltre said. "Change is never easy, but neither is starting and running a business. We see our small-business clients embracing change and reinventing themselves to secure a rewarding future."

As part of the reinvention process, small-business owners say they focused on overhauling the products or services they offered (47 percent). This was followed by adjusting their infrastructure, such as technology or staffing (24 percent) and beefing up their sales and marketing (18 percent). A small amount (7 percent) said they reduced pricing and took less profit. Only 3 percent relocated.
If small-business owners aren't reinventing their business, they stay sharp and evolve to keep up with the competition. The following steps were cited as ways they kept business thriving:

88 percent kept updated and knowledgeable about their field

70 percent increased face time with customers

67 percent updated/upgraded computer systems

52 percent increased their use of the internet and social media

51 percent built a network of suppliers and partner companies

Regarding the steps they plan to take during the remainder of 2012:

65 percent expect to increase marketing

56 percent will work to get better pricing on expenses

52 percent expect to work even longer hours

50 percent will introduce new products or services

49 percent will use social media, such as Facebook or Twitter, to market their business.

"Small-business owners should consider these steps as a check list for growth and survival," said Veltre. "Never one to sit idle, a small-business owner continually invests in change in order to stay relevant."

Part of that reinvention comes from spending, as proven by 38 percent of respondents who increased the amount they spent on capital investments like computer, inventory and facilities over the past 12 months. Their top two sources of funding have been revenue and profits (75 percent) and personal savings (62 percent).

Personal Sacrifice Earns Appreciation from Employees and Community
The past few years have taken a personal toll on small business owners: 63 percent say the major challenge they face owning or running a business was personal stress and being accountable for everyone and everything, second only to the general state of the economy (66 percent).

Despite overall optimism, small business owners report making significant sacrifices to keep their businesses going and growing over the past few years. Not only did 78 percent take less profit to support the business at some point in the past, 66 percent did so to pay employees rather than reduce staff. A significant majority (70 percent) also say they worked more hours than usual, often sacrificing family time and missing vacations.
In addition to using their own money to help their business survive (69 percent), the majority of small-business owners (54 percent) say they have gone without a paycheck. Looking back over the history of their businesses, almost one-quarter (23 percent) have gone without pay for one year or more.

Specifically, 80 percent of small-business owners believe their employees appreciate the sacrifices they made to keep their businesses operating. Demonstrating true commitment, employees showed thanks by their own investment in the success of the company:

More than one-third (38 percent) of owners say their employees worked additional hours without pay;

Another 18 percent credit their employees with voluntarily missed or delayed paychecks.

To show their own appreciation of employees, small-business owners offer additional time off (78 percent), a bonus (74 percent) or a raise (70 percent).

Customers, too, appreciate the stress and sacrifice of running a company. Almost seven in 10 (69 percent) survey respondents say their customers recognize and appreciate their sacrifices. Even more (87 percent) say they have been thanked by customers.

"The level of appreciation shown to small-business owners by employees and customers is uplifting," said Veltre. "We encourage everyone to thank their favorite small business owner. Small business is a highly personal undertaking; to the small business owner a simple, personal gesture of appreciation goes a long way."

About the Survey This Citibank survey was conducted via telephone May 1, 2012 – May 18, 2012 by Abt SRBI Research and Public Affairs among a national random sample of 750 small business owners/operators, aged 18 and older, throughout the United States. Oversample interviews were conducted in New York (200 interviews) and California (200 interviews) markets. The margin of error for the national sample is approximately +/- 3.58 percent and +/- 6.93 percent for New York and California over samples. Surveys are subject to other error sources as well, including sampling coverage error, recording error and respondent error.